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Yes... for the past few years (maybe since electronic filing began with EFAST), we have tried to consistently update for first day of plan year entrants. I can't recall where I heard this, but I thought I read or heard somewhere that EFAST will not flag an error if end of year count didn't match next beginning of year count, like they do for assets. I recall, years ago, at the ASPA (yes, one "P") annual conference in the IRS Q&A session, comments I heard were that accountants like to see end of year "numbers" match next beginning of year "numbers"... but I can't recall what the IRS said in response.

If the old plan had been merged instead of amounts rolled over, protected features of the balances (distribution timing, etc) and distribution restrictions (no deferrals or SH for in-service prior to 59.5) would have stayed with the merged amounts. If everyone rolled over to the new plan, the $ are there. The only thing needed to put the current plan where it would have been if the improper distributions had not been made is to reattach those features to the amounts rolled in. I think that would be your correction.

If it's considered a plan expense, I don't believe it's a "reasonable" expense. You must satisfy both requirements. Would it be reasonable to separately reimburse the plan actuary to take courses on how to value pension plan liabilities, or to reimburse your auditor on how to audit a pension plan? Of course not, and I think this is analogous.

My concern is the $250 deposit to the plan would have needed an allocation allowance in the plan document for contribution to the tax exempt trust. Absent an allocation methodology, the $250 would be considered an invalid contribution needing to be returned. Documentation regarding the plan expense becoming an employer expense when plan assets went to $0 would be necessary to disclose why the returned contribution is less than the original contribution, plus earnings/losses.

Check your document as to how much time you have to allocate it but I would recommend they allocate it as a match per the current terms AND amend the doc so that in the future they could use it for any legal purpose. Allocating it as a NE could potentially create a lot of very small accounts. By allocating it as a match, you are giving it to participants who already have accounts.

I agree that excluding TFB is a 414(s) safe harbor compensation exclusion. But I don't think that alters the premise that this amendment favors predominantly HCE's, and it seems to me that isn't allowable under 1.401(a)(4)-1(c)(2), or possibly other sections as well - I'd have to look, I dunno offhand. Excluding elective deferrals is a 414(s) safe harbor as well - suppose all the HCE's defer 18%, and the NHCE's defer 2% on average. Is it ok to allocate the profit sharing contribution on a retroactive correction to include TFB's and elective deferrals, such that the PS allocation now substantially benefits the HCE's far more than without the retroactive amendment? I'm just saying I wouldn't do this as SCP. Perhaps a VCP would be successful, and then no worries! But everyone else may think I'm nuts, overly cautious, or just plain wrong. Enjoy the weekend! I expect that what passes for my brain will be going on strike before too much longer...

BG5150, since you could adopt it now with a 1/1 effective date, you should be able to amend it now to have that effective date.